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Carmakers Have Record Supply, Yet Predict It Will Fall

AP reports that sluggish sales in the US this year have left carmakers with record levels of new cars and trucks. The report says that while carmakers typically like to have a supply of vehicles for about 65 days, some companies, including General Motors Corp. and Ford Motor Co., are carrying inventories that extend beyond 80 days.

The report adds that even Asian makers like Toyota, who usually keep inventories low, are at higher levels than normal.

The report said however that some of the abnormal inventory is expected to diminish as the latest wave of incentives takes effect. It is also expected that there will be some post-Iraq war improvement to consumer confidence.

AP said that US light vehicle sales are expected to reach a seasonally adjusted annual rate of 16.6 million units in May, up from 16.4 million in April, 16.2 million in March and 15.5 million in February, according to a forecast from Ward's Automotive Reports.

"The cars are out there, but I think they'll get sold because there's some catch up in the system and consumer confidence is improving," said Paul Taylor, chief economist for the National Automobile Dealers Association, quoted in the AP report.

The report said that GM has an inventory of 1.25 million new cars and trucks - enough to fill orders for 82 days.